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Tuesday, 8 June 2010

An(other) open letter to David Gill

In the aftermath of the new research showing the parlous state of the Glazers' US property business that I and others have published in the last few days (not to mention this timely piece from Forbes today), I have written another open letter to David Gill. This time there is no need for ten questions, one will suffice:

"In light of these revelations, can you assure United supporters that none of the club’s current or future cash will be used to repay the Glazer family’s PIKS?"

Great stuff Anders. I currently live in Melbourne, so won't see Panorama, but the gory details are all here.

You've alluded to Lehman Bros a couple of times lately. It might be worth your briefly elaborating on exactly why Lehman collapsed, especially given the apparent similarity between this event and (in microcosm) Glazers' current property travails in the USA.

'A Colossal Failure of Common Sense' by Larry McDonald is worth a read to begin to understand the fantasy economics of the USA in the last decade in general, and Lehman's collapse in particular.

I can't see Mr Gill replying with the truth unless it's preceeded or followed by his resignation. After all, if he is a good businessman getting another position should not be impossible and if he has any affection for the club, how can he be party to what is happening?

I do wonder if maybe the answer lies now with Sir Alex. Hard as it would be for someone whose love of the club is unquestionable, is the best way out now just to bring the Glazers crashing down? If he said he was resigning on the back of it, the Glazer cash cow would surely collapse, and with it their debt laden empire.

If would be painful for the fans, but I don't think the FA, Premier League or even UEFA could allow MUFC to disappear completely, especially when the debt we carry is not as a result of stupid spending by the club, but by an over-leveraged buyout that in sane economic times shouldn't be allowed to happen. It might also provide a vehicle for some decent legislation to protect all clubs that would be hard to argue against.

They are then ALLOWED to spend this money on whatever they damn well pleasy.

If they CHOOSE to spend this money on THEIR debts then this would be a sensible thing to do. I know that whenever I have loans, I pay them off asap from my earnings.

If Wayne Rooney spent his salary on a little rollercoaster for Kai in the back garden, will you be denouncing him and saying how that money could have been used to save £x amount on season tickets instead?

I don't like the situation any more than you do but you're being a bit naughty here.

I'm not the one who said "That [the PIK debt] is something that the family, the owners, have put in place and they will ensure is repaid or is part of their overall financial planning in due course, but that is nothing to do with the club."

I have never questioned the legality or (from the Glazers' point of view), sense of using the club's money to pay the PIKS. I am questioning the half truths from the club that suggest the club will not be used to repay them. By speaking these half truths they hide the impact on our football club.

This isn't some parlour game, if the Glazers exercise their rights to draw out cash, then in a year the club makes EBITDA of £95m, the net cash available for investment will be £17m (explanation below):

£95m - £45m interest = £50m "consolidated net income"

Less Dividend entitlement @ 50% of £50m = £25m

Less prepayment impact of Aon early payment (£8m) = £17m

So in a year we make £95m EBITDA, the club clears "half a Berbatov" in cash flow.

So it isn't some semantic argument, it's the reason the richest club in the world can't afford to replace Giggs, Scholes and Van de Sar....

Can I just thank you personally for all your sterling efforts; your astuteness has seemingly got everyone talking. One day when this all comes crashing down on the Glazers' heads I hope you get offered a role within the new make-up at the club.

Andy - I can't help but feel that this expose will dramatically change the landscape. I think you have the Glazers cornered in a cul-de-sac from which there is only one escape, namely to sell the club at a more sensible price and beat a hasty retreat. Fantastic work - you will be hailed as a hero in due course.

What a dumb letter to David Gill. In one breath you conclude that the Glazers cannot pay the PIK out of their own resources- WRONG Manchester United is their resource and they could if they want use any and all funds but even more ridiculous is after your conclusion that they cannot pay the PIK you say you want assurances that money from Manchester United will not be use. In reply- who are you to ask anything of the Glazers as your efforts to discredit them on Panorama failed and secondly why would anyone be so stupid as to say you cannot pay personally so do not use your asset to pay the PIK? Indicating not only that they can pay the PIK from assets be it Manchester United or others and why would you want them to default and place the club in jeopardy anyway?

No wonder there are "Anonymous" posts they are such complete rubbish even a stupid person would not put their name it them. I do however agree-stealing headlines for stupidity. In fact it is so dumb I cannot visit such silly blogs. Financial Analyst? RIGHT I ahve met many and Green you are not one worth a penny!

You won't get an answer but I do feel as a fan, customer, and (previously) investor in Manchester United I have a right to know.

The investor community also has a right to know.

Gill has gone on record saying the PIK debt has no recourse to United's assets. He's right. He's also gone on record as saying they won't be paid from club funds. He's probably not telling the truth.

Either way it's bleak. Glazers take the money, there's nothing left in the kitty to rebuild United. Glazers don't, then the PIKs build to 2017 and 1.1bn worth of debt that can't be paid will be hanging over the club.

"I have never questioned the legality or (from the Glazers' point of view), sense of using the club's money to pay the PIKS."

You're still doing it!

Come on Anders. You're clearly a very intelligent man so why pretend to be so stupid? You don't do yourself justice.

"The Club's Money"...

When the Glazers pay themselves a "salary" to which they are perfectly entitled - you know, being the owners and all then that is NO LONGER the "club's money" - it is their OWN money.

You might as well ask Gill what Fergie will spend his salary on and ask him what the players will spend theirs on - he won't answer you because he likely doesn't know and doesn't even care because it is none of the club's concern.

Once you get past the distinction between "club cash" and "Glazer cash" (and no, this is NOT pure semantics - it is a crucial distinction) then can see that there is nothing even remotely untrue about what Gill said.

Enjoying all the trolls, dickheads and parti-pris no-marks like Brian, trying to frustrate the momentum with straw man arguments?

No, thought not. But do carry on - history will remember you kindly for it, and all those who had the imagination and the guts to fight the good fight.

Gill probably knows it's all shot to shit, but knows equally that he'd be tugged out of OT by his ears if Red Knights style owners ever materialised. In complete defiance of logic or decency his own self-interest means he carries on with this silly charade.

Wouldn't it be refreshing to see a corporate man grow a pair and actually give his customers (ahem) a straight answer for once?

I have no problem with refering to money that the club generates are labelled as "the club's money". In a better world it would in fact be invested to the benefit of the club, it's football team and it's supporters rather than seeing hundreds of millions of it hauled away to service some Americans businesses and debts. Thinking of the amount of money being "wasted" from a United or even footballing standpoint, it is very hard to justify this as a fair "salary" for the Glazers.

Quite funny watching the likes of Red Devil continue to totally miss the point. He seems to thin that you're accusing the Glazers of breaking the law, and can't understand that you're actually accusing them of exactly what he confirms they are doing - taking vast amounts of money out of United for their own gain without having laid out a penny of their own in the first place to get hold of the club.

The Red Devil and Brian - well simple do you 2 go to games? and if you do, how does it feel to know that your cash is being used by scum like the glazers to do what ever they like instead of not going which is supposed 2 be the case? invest in the team and the stadium, they can spend it on bank loans, spend it on sinking ventures hey they can spend it on themselves, lets go even better they can take 100 million out of the club and waste that money like they contnue to do, hey they can spend the ronaldo cash which has made the team weaker.

and red devil what makes your comment so disgusting, its like saying the owners have a say which player leave united, so if rooney was sold you are fine with it because its their club, news flash its not their club? its partly the banks club because they owe the bank millions. Also you were fine how thatcher was running the country, oh I forgot the goverment run the country so they can do what the hell they like

Great blog, great work Andersred, I have wanted to see this type of analysis for a good while, and you have presented it very clearly.

I think a specific point here is that Gill is being disingenuous - he has no control over what the owners do with any surplus made by the club and therefore can not give any assurances. Andersred's request for these assurances exposes Gill's position quite clearly.

Surely the main point here is that United would be better operated as a fully independent standalone business where the majority of any profit is always re-invested in the club. Being part of a poorly run business portfolio is simply not a good place to be. Any fule no this.

More great work Andy, Mr Gill would be squirming today if his skin were the normal thickness of a decent honest human being.

I have no evidence whatsoever of this, but from reading their various (seemingly co-ordinated?) posts, I'll wager the likes of "The Red Devil", "EastStand375", "Jorgen" and now "Brian" have other corporate axes to grind. Why else would they choose to come on here and try to defend the indefensible with their psuedo enjoyment of rigorous intellectual debate. Your responses to these are first class.

In addition to the restricted transfer fund that is quite obviously now in place I expect wage cost control to be put in place.

The Glazers have singularly failed to keep wage costs under control during their tenure - in fact it has far outstripped even their own predictions.

But the market has moved on and Chelsea, Manchester City, Barcelona, Real Madrid and even - yes even - Arsenal can now offer greater wages than United.

It is really telling that Rooney ("best player in the world" and all that) isn't even close to being in the top 20 best players in Europe. His new contract has been delayed for over a year now and he earns about a third of Ronaldo.

Love United Rooney might do but there are other players - if we ever have any stars again under the Glazers again - that might well be happy to take bigger pay packets elsewhere.

"So surely it would be a good thing for the club if they now started to pay down that debt and reduce the toxic PIK loan?"

No.

Because (thankfully) it IS their legal liability and not the club's, we shouldn't care whether they pay it off or not. It's HOW they pay it off that matters.

If they don't pay down the PIKS then either they have to sell the club (likely to be an improvement) or they lose the club in 2017 (which would have a certain amusement value).

If they lose the club, the hedge funds who get it would no doubt attempt to sell it on. They would after all have just picked up Manchester United for a princely £138m (the original PIK debt).

The nightmare scenario is the one where they use the club's money to pay them off, leaving us under considerable financial strain.

The whole point of the First Allied work (other than proving they aren't business people who can manage leverage), was to demonstrate that United is the only possible source of cash to pay the PIKS.

It was obvious to me from 11th January when the bond prospectus came out that this was the plan (Hume's "argument from design" if you like). But a lot of people said "just because they can doesn't mean they will" and such like. I've tried to show that they HAVE TO use the club's money. There is no other option (except selling United before the PIKS run out of control or selling the Bucs of course).

I hope that makes sense. Gill is right that the PIKS are non-recourse to the club, but he is wrong when he claims that means they are nothing to do with the club....

Firstly, as a United fan I would like to thank you for your terrific research on the Glazers and their ownership of the club.

I have been following your blog for the past few months and it has made fascinating (if at times unpleasant) reading; the research on the First Allied Corp in particular. I think a few football/finance journalists could learn a thing or two from your aforementioned blog.

Furthermore, your work has no doubt raised awareness among United fans who do not possess the technical knowledge required to decipher bond documents/company accounts etc etc in regards to the exploitation of the club we love.

On another note, anyone who posts comments in response to your findings such as the so called 'Red Devil' and 'Brian' and posts anything other than utter contempt for the Glazers' management of the club should do us all a favour and stop wasting our time. No true United fan could have read any of the blogs on your site and conclude that they are even remotely happy with our current ownership structure, let alone attempt to pick holes in your fantastic work in bringing the financial affairs of MUFC to the masses. Or worse still, defend the Glazers' ownership of the club with a pathetic 'its their club so they can do what they want with it'. They are clearly Glazer sympathisers, either that or they work for the Glazer PR department. They bring absolutely nothing to the table in terms of every United fan's goal of removing the ownership of the club from the greedy hands of the Glazers and if I were you I wouldn't even give credit to the rubbish they have been posting by actually acknowledging them with a reply.

On a final note, I would like to say keep up the good work and lets hope that season ticket renewals do not get anywhere near the 54,000 mark by deadline day.

Andy if you were to table an offer for MU, what would you base your valuation on (absolute or relative valuation)? If relative, would you place a premium on the terminal value or the residual value? Finally, how far into the future would you look for the valuation purposes?

Seems I have brought a lot of flak on myself today. It would be so much easier for me to just join the LUHG gang, boycott the games and refuse to hand over any money to Manchester United until they are gone but I just don't believe that that is the right course to take. I'm sorry but I just don't.

I think (in fact, these discussions are PROOF) that this is divisive and is turning Man Utd fan against Man Utd fan.

If these protests go on then it could have far more long-term damage on the club than the Glazers could ever manage on their own.

My stance is that I don't particularly like the Glazers but the fact is that they do OWN United.

It is not like the Club is up for sale and we are arguing the various merits or otherwise of prospective owners.

The time for that has been and gone.

Despite what someone up there (RobC) suggested, I have no corporate axe to grind. I have no loyaties or ties to the Glazers whatsoever.

And this is where myself and Anders differ.

MUST (and Anders is a fully fledged part of the team now, it seems) have a vested interest in getting rid of the Glazers.

I have no vested interest either way.

I simply have to ask what is the point of the protests?

What is the point of trying to force Gill into a corner? To what end? Just so that you can say, "I told you so!" Brilliant. The Glazers will still own Manchester United, though.

What do you want from all this? For Gill to resign? Great! And then what?

Do you want people to boycott STs and games so that the Glazers lose matchday revenue? Well, I would wager that someone else would take their seat but even if they didn't, do you not think the Glazers would simply find the money from elsewhere to make good the deficit? Even if that did mean selling players etc?

I just think you are playing a very dangerous game in order to win a battle because by the time the battle is over, there might not be any spoils of victory for either side to claim.

The Glazers might have gone but so might Fergie, Gill, the players, the stadium, the sponsors and half the fans who are sick and tired of the rioting and sick chants when all they want to do is watch a game of bloody football!

In response to some of the criticisms aimed more specifically at me:-

@ RobC - I don't have a corporate axe to grind. I have no loyalty or ties to the Glazers but I will admit that I am no fan of MUST. nothing personal, I just don't like their methods.

@ Krap - Are they entitled to draw a £220million salary? Well, not in one year, but over time then, yes, unfortunately, they are. Being angry won't change that fact. So either face the reality or bash your head against the wall.

@ rooney the new king - I am not a Glazer fan. I am Manchester United fan. The day I get all excited about a bunch of bunch of bald guys from America will be a sad day indeed. Until recently, I had never even given the owners (current or previous) a second thought.

Also, where the hell did you get the notion that I would be "fine with" them selling Rooney? Firstly, as far as I can tell, they have had NO say in who leaves the club. Those decisions have been made by Fergie alone. I would NOT be happy if they sold Rooney in order to service the debt but we are into "speculation" territory again here. It hasn't happened and nothing they have done in the last five years suggests that it is going to happen. My comments above about revenue shortfalls and decisions that may have to make in order to make them good notwithstanding.

@BS - "anyone who posts comments in response to your findings such as the so called 'Red Devil' and 'Brian' and posts anything other than utter contempt for the Glazers' management of the club should do us all a favour and stop wasting our time"

Classic. Why don't you try that on the Glazers? Just tell them to go away! Good luck.

Anders, you are to be congratulated for all your hard work. It's too bad that even a programme couched in such simple language as last night's Panorama was seems to have flown over the head of some of your readers.

The Red Devil - I did not say you are a glazer fan, but you are contridicting yourself, you are saying well they can take what ever they like out of the club, then you are saying they have no say of who leaves, arent they the owners they could sell and take out who ever whatever they like. If you feel they are good owners that is your opinion it does not mean you are a glazer fan or working for them.

And the reason why fans will not put money towards the club is the same reason you are given, what is the point in given money when it does not bring great reward either, we are not seeing key players signed anymore, we are not competing for the best players and we are not willing to pay the wages demanded for the players needed, its success on the cheap.

I will not put a single penny into the club when its offloaded to the parasites pocket or its off to the bank, its not going to making OT a better stadium, and its certaintly not going to maintaine the quality of the squad they are living off the work of sir alex ferguson.

but red devil do not get me confused with others, that who ever defends what some parts of what the parasites do mean you are a fan of the parasites. I just find it inmoral to go to a united game when 80% of that money you spend will not be invested into the playing squad, and I do not care if we go through lean years I refuse to give another dime simple has that

One question I have is regarding the Glazer takeover of the club and how the debt was apportioned at he time. I hope someone will correct me but wasn't it something like the following;

a)£270m secured on the club via bank loansb)£270m raised via PIK loansc)£270m of the Glazer's own money

If the above is true then why has the club been lumbered with over £500m of debt? I can only assume that the the PIK loan was partially converted into the club loan? So why is Gill and his Apostles claiming that the PIK loan has nothing to do with the club when there is recent evidence to suggest that this is the Glazer's "modus operandi".

It seems that the Floridian financial geniuses, as we Mancs like to say, haven't got a pot to piss in.

steven - the old debt is still there, they are paying it off with the clubs money that is one of the many reasons, with less interest payments, but the big problem is the interest rates will go through the roof. the bond issue was able for the glazers to take more money out of the club thats why it was done, the debt does not change but it has made MUFC's position much much worse.

@ rooney the new king - I am not contradicting myself. As the owners they could sell whatever players they want, they could sack Fergie and they could take a match to Old Trafford and burn it to the ground if they wanted to.

Why would they do such things? Answer: They wouldn't. It would be a pretty stupid thing to do.

Now, as for taking money from the club that they own, that is NOT the same thing whatsoever.

Ask Anders how much money they have actually taken from the club so far. And I mean ACTUALLY - I think you will find it is a pretty meagre sum over the last five years - they could have taken a hell of a lot more but they didn't. Off the top of my head, I think it is something like £13 million.

They do seem to realise that selling someone like Rooney would cost, long term, far more than they gain in the short term.

As for not competing for the best players... well, Fergie says that he doesn't believe that there is value out there. The anti-Glazer band jump on this and say that he is only saying that because he has no money to spend.

Have you ever stopped to consider that he might actually be telling it as he sees it?

Manchester United have a bit of history in terms of breaking English transfer records but they have always been far behind the likes of Barca and Real Madrid.

Our record purchase is Berbatov at around £32 Million (ironically purchased during the Glazer era).

In 2001, Zidane joined Real Madrid for somewhere around the equivalent of £50 Million.

The same thing goes on today with Real Madrid paying £80 Million for Ronaldo. £60 Million for Kaka and £30 Million on a striker they hardly even play.

We have NEVER been into that whole Galacticos ethos and that is not something that has come with the Glazers.

As far as I can see, whenever Fergie has identified a target that he feels can add something to what we already have, he has been allowed to go for them.

I don't really want to get dragged into a debate about the strength of the squad here though. It's a bit off topic.

Suffice it to say that Fergie has been accused of "losing the plot" several times over the years but he has always proved his doubters wrong.

The difference these days is that certain people are claiming that his views are not his own and are the product of the Glazers' ownership.

@ rooney the new king "I will not put a single penny into the club when its offloaded to the parasites pocket or its off to the bank, its not going to making OT a better stadium, and its certaintly not going to maintaine the quality of the squad they are living off the work of sir alex ferguson."

I can sympathise with that.

It is likely the main thrust behind most anti-Glazer people but they probably couldn't state it as eloquently as you do.

the red devil - if you are on rom I have said my fair bit on the glazer takeover, you should go on ROM it is an excellent site to debate united.

Well before the bond issue they were restricted to take what they could out of the club. now? pandoras box is open they have the entire set of keys to get their truck and take what ever they like out of united the gloves are off, before it was low because they could not, thats why they put the bond issue in place even if it ment exposing the books of the club.

many are exposing these parasites that they are not great buisness PPL afterall like T rex was never the badass hunter that was seen by many, but ppl who make leverage buy outs piss ppl off in the process and just bleed those companys dry on how much blood they take out and how much a company can stand, that is what you call a text book example of a parasite who has 2 live off its host to survive.

I did not want 2 sound like some ass hole but when it comes to the glazers its personal, this ownership cannot be sustained, the numbers do not add up when there is too much investment needed to keep it succesful

Anders - are these the very same original PIK debts stemming from May 2005?

"The PIK notes pay interest of as much as 20 percent, which accumulates and pays out when they mature in 2015, according to the subscription agreement. There's an unspecified premium charged on the notes if they're repaid within two years. The hedge funds take Glazer's shares in United if the notes are still outstanding after 63 months. " Bloomberg, June 2005, http://www.joinmust.org/forum/showthread.php?t=17707

Is that 63 months from May 2005 (i.e. imminently)? What does this mean?

@ The Red Devil "Ask Anders how much money they have actually taken from the club so far. And I mean ACTUALLY - I think you will find it is a pretty meagre sum over the last five years - they could have taken a hell of a lot more but they didn't. Off the top of my head, I think it is something like £13 million."

A very carefully worded statement that. How much have the Glazers taken out of the club? You're probably right, they've only taken around £10-15M into their personal accounts.

But how much have they cost the club in interest payments, refinancing costs and management fees? Somewhere around £400 million. Not exactly a drop in the ocean.

"It has already been established that the £437 Million figure that Anders has quoted as "the cost of the Glazers" has been blown out of the water."

Has it? Where? By whom?

I set out that number so people could see what was what. Some people choose to believe the rolled up PIK interest is not going to be a cost to the club, that's their choice. As for the rest, nobody has proven anything of the kind!

You simply CANNOT put something as a cost when it has not yet been spent, no matter how much you happen to believe that it will be a cost in the future.

The figure was being used the answer to the question: "How much have the Glazers cost United since 2005?"

That's the past tense.

Now, if you want to speculate and say, "this is what the figure COULD be but I cannot prove that yet", that's a different matter entirely.

Until that PIK interest is there in black and white in the accounts then I am sorry but you simply cannot put it in there yourself.

We also agreed, did we not, that you should also have accounted for the corporation tax and shareholder dividends that would have been paid had the Glazers not taken over but have now been "saved" (for want of a better word)?

It's a group of companies. The tax relief comes from the PIK interest, RFJV shows the interest "in black and white". It may roll up but it's an accounting "charge" non the less.

What I didn't include (because of the normal confusion caused by combining "stocks and flows") is the underlying root cause of all this, the debt itself.

Post the credit crunch, nobody should just assume debt can be forever "rolled", just look at Northern Rock (or First Allied for that matter). So take off the PIK interest if you wish. Add the bond debt (at the current exchange rate mark to market it's around £534m). That debt principal will have to be repaid one day. Deduct the mighty savings too if you want (£124m), add on the higher than expected swap loss (£5m).

£437m + £534m + £5m - £124m - £83m = £769m

Peanuts.

Like I said to Eaststand before he pissed off to RedCafe and became GCHQ, why go for this distraction argument? Focus on the main issue, the Glazers have imposed huge NET costs on the club, why quibble about whether it's £300m, £400m, £700m.... It's going up (ex-PIK) at an annual £79m a year if they exercise their dividend and fee rights and £45m if they don't.

It's an obscenely large sum of money on any methodology and it isn't right.

So now you are saying that the cost to Manchester United. The ACTUAL cost of the Glazers HAS BEEN £769m?

I will tell you why it is important to get the facts and figures absolutely spot on.

It is for this reason:-

"But is doesn't stop there - during the period of the Glazers' ownership they have wasted £443m in fees and interest - more than the total ticket revenue (£398m) for the full 5 year period. In other words, without the Glazers' takeover, that money could have paid for every supporter to attend Old Trafford free of charge for the last 5 years and in addition pay every season ticket holder £800 cash lump sum each. But instead, under their ownership all that money has gone out of the club.

That's not exactly true. You are mixing cash flow with accounting costs in a way that makes me think about mixing apples and pears.

As we (and you agreed to in the comments) established, the loan is a cash flow and not a cost. If you want to include cash flows you should also include the dividends the Glazers have opted not take out as a positive (an easy way of doing this is to use the PLC, like you do in the reader comments to that article). This is nothing you did in the main text and it is not a figure that is being communicated.

Moreover, the PIK's are not affecting the cash flow yet in any company. Eventually, they will but it is not clear which companies that will be affected. But by all standards you should also include the tax benefits in you table and not only in your comments, because that is also a positive cost reduction and gives a positive cash flow effect.

Still, you want to include the PIK's as costs. But one thing that is certain is that as long as the PIK debt itself isn't transferred to Man United, it will never be a cost for the club, although it may affect the cash flow.

Also, you act as management fees only exist in Man United. This is something that is extremely common in any group. This is not something that is unique for our club. To say that it is a cost for having the Glazers is ridiculous.

You can always say that the numbers are there, but to say you wanted to show costs only (while mixing costs and cash flows), is not really fair is it? It certainly doesn't paint a complete picture.

With that said, we're still left with a hefty sum of money that the Glazers, or rather their take over, have drawn from the club. I also agree that chances are that cash flow from the club will help pay off the PIK's. So that's not the question. My problem is that I think Anders are exaggerating things. This has all the chances of leading us into an even worse situation.

Furthermore, the way you talk about the prepayment of the new sponsorship deal makes me think you don't really know what it's like in the real world of running a business and/or want to paint a picture that is in line with what you think.

You portray it as bad that we received a large chunk of money up front. This is puzzling, especially since last year was the hardest year in modern times to get your hands on cash. We have the cash now, at least as of the last report, and can do what we want with it. That is always a better option than having to wait for it (for any given amount).

Now, we have the opportunity to put it to use, instead of AON having it and us waiting for it. The discrepancy between EBITDA and cash flow may be erased by investing the money wisely now(I know, most of you doubt that the Glazers know how to do this, but still).

This is why I urge anyone to try and put Anders under the same scrutiny as anyone else. I you don't, you're at his mercy and as I see it there is reason to believe that what he claims to be the truth is rather, his version of it.

the red devil - to be honest I would rather the club was paying tax and dividend than be in the current financial situation. the big difference is the plc united there was no debt so you are not paying out even more, but united were not tied to the banks and how they were run was the best in the business. The current situation the club is in too much debt, and it has made the club almost impossible to buy, and unlike the plc united the current united is losing money every year, when you have had the type of season united had in 08/09 season you expect to be in the green by well over 70 million, not take a ronaldo transfer to make a 22 million pound profit which those figures are scandalise. Also when you make a 44 million pound loss for winning the 2 biggest prizes in the game today then there is something badly wrong in the financial running of the club.

"I think (in fact, these discussions are PROOF) that this is divisive and is turning Man Utd fan against Man Utd fan" - Where have you been for the last 5 years?? Do you actually go to matches?? I used to be surrounded by sound, knowledgably reds, now since the Glazers showed up and racked up the ST prices im surrounded by idiots who sing 'who are ya' and try to get 'fuck off berbatov' chants going. I think House of Style said in the last UWS the Glazers wanted to divide and rule and that is what they have done.

"MUST (and Anders is a fully fledged part of the team now, it seems) have a vested interest in getting rid of the Glazers" - I think most of us here have a vested interested in getting rid of the Glazers - its called love for the club, these parasites are costing United millions in both personal fees and rather ham fisted re-financing arrangements. Some of us actually want to do something about it.

"Do you want people to boycott STs and games so that the Glazers lose matchday revenue? Well, I would wager that someone else would take their seat but even if they didn't, do you not think the Glazers would simply find the money from elsewhere to make good the deficit? Even if that did mean selling players etc?" - Money from elsewhere to make up the deficit?! errrrm did you not realise that was the whole point of Andy's investigation - to show they don't have money elsewhere to make good the deficit. As for people taking my ST, im not too sure. Some of us remember the days when United weren't that popular (step forward Mr Sexton) When the bad times come (which they will- post Fegi – no money to spend) and United may start floundering, I can see us getting bak to our hard core of 35 – 40,000, that’s if enough of them have not give up completely by that stage.

“As for not competing for the best players... well, Fergie says that he doesn't believe that there is value out there. The anti-Glazer band jump on this and say that he is only saying that because he has no money to spend”- Haha do you have a memory, do you not remember Fergie constantly complaining throughout the 90’s that United refused to compete with the best on transfers? Read his autobiography (then read Michael Cricks – but that is a story for a different day) As for this not buying players over 27 nonsense – where to start with that, im not sure!

I think it's only right that Andy's figures + conclusions are put under scrutiny, but we have to be careful that it doesn't obscure the core fundamentals of United's financial position.

I accept the figures of £426mil are questionable, but all projections/suppositions like this are based on assumptions and that is unavoidable. Are Ander's assumptions valid and reasonable? I think they are.

I hear the call to factor in corporation tax into the figures - but surely that would only apply if we actually had reported the operating profits of the past and NOT made any capital expenditure. Maybe the PLC might have put some of our profits to use expanding the stadium (as was under the consideration 5 years ago) or maybe they might have invested more in the team? So to insist the corporation tax is included is also questionable, we might not have paid any.

So even if we do factor in some of the things people suggest, surely the "cost" of the Glazers will be well over £200mil at the least?We also have to face the reality that the overall debt has not been reduced, and they show little desire or ability to do so. Consider the PIks, and it easy to argue that our overall debt has risen significantly and continues to do so.

I also hear the talk of Glazers increasing revenue. Fair enough, but can we really attribute that to them? The increased TV money has come from collective deal whose value increased naturally. The Glazers had little or no influence on that I'd say. They are riding the gravy train, they are not driving it. We can also attribute some increased revenues to increased ticket prices - should we really thank them for that when the club is already highly profitable and has no urgent need to rise revenues?

So you can pick holes in any financial figures and chip away at the weight of the conclusions, but the fundamentals of United's financial position remain clear to me, and we face a very difficult few years if the Glazers and THEIR acquisition debt remain. Once SAF steps down and the legends retire, the lack of investment in the team will become glaringly obvious.

It is happening to the Bucs, and has for 5 years followed by Glazer excuses. We are facing the same future.

They should be included in the analysis, but from my memory as a shareholder, we often paid a small or no dividend as a PLC and told investors we were "retaining profits to reinvest in the club".

Considering United were by far the best performing football stock (with great increases in stock value and we actually delivered some dividends) investors were happy with us not giving a full dividend. In comparison most other football stocks fell and never paid a dividend.

So again, assuming we do factor in all the other considerations raised, we could surely only knock of a relatively small amount of Ander's 426 number, leaving still a HUGE cost drain on the club, all imposed by the Glazers.

I agree with you completely. I don't have time to fully respond, but I do disagree on one thing and that is the Bucs. We are not facing the same future, since we operate under completely different circumstances. For example, they have a possible lock out in the NFL in 2011 on account of their (lack of) CBA. I can't imagine that happening in the PL.

I wasn't saying that one should confuse stocks and flows, I was trying to illustrate that all sorts of costs could be included if one wanted to. Cash costs are good metrics for measuring businesses but sometimes underly harsh or underly leniant, hence depreciation, amortisation, market to market currency and interest gains and losses etc.

Storing up deferred costs to be paid later can still be very bad news. I included the whole swap exit cost in my number as it WILL be paid by the club. Look at the major Brazilian companies who lost millions on currency hedges as the Real collapsed vs. the US$ in 2008. When the losses became clear, the market ascribed an NPV to the future losses (restructured very much like the swap) and knocked that off their valuations, it didn't say "well it has only cost R$100m so far so we'll ignore the R$500m to be paid over the next two years".

Qualifying costs is therefore not a precise science and when it involves counterfactuals (like "what would the plc have done?" it becomes even worse.

On the PIKS we'll just have to agree to disagree. I believe in Hume's "argument from design" (as it relates to human activity not god). The bond prospectus was designed with only one thing in mind, releasing United's cash to pay the PIKS.

Some people chose to disagree so I went off to see if I could find any other source of cash in the Glazer empire. Hence the First Allied work.

That work surely proves that either they have to sell United, sell the Bucs or use United's cash to pay the PIKS.

The management fees are incremental cost compared to the plc. Of course groups charge inter-company fees, but in its previous incarnation United didn't have to. They are new with the Glazers.

On Aon, as I explained at the time, I found it curious, as value is normally maximised by accepting staged payments in football. I said it was circumstantial evidence and that we would probably never know the truth.

As for putting me under "the same scrutiny as everyone else", I'm very happy to be scrutinised. I reckon I am more scrutinised than anyone else writing on this subject. I ALWAYS publish full sources (unlike anyone else).

anders

PS. Red Devil, I've just seen your post, I'm not doing a Gill you cheeky git! I'm trying to catch up on five months (paid) work I owe.

It is factually correct, but it would have involved some borrowing to get to the full amount!

If the club hadn’t been taken over and had just put in place the same balance sheet the gimps had (but without the PIKS), it is certainly true.I wrote a draft post on this and then ditched it as being too weird.

It went something like:

Alternative universe

Takeover of the plc by some Abramovich type for cash

Club borrows £500m to improved “balance sheet efficiency”

Club cuts ticket prices to zero and gives all ST holders £800

Net financial position of club – EXACTLY WHERE WE ARE TODAY

Like I said, too weird!

The point of the MUST release was to try to point out the total waste. Frankly, if it matters so much, choose your number and then think whether you are happy with it:

£442m “gross” inc PIKS = 5 years of free tickets + £800

£323m “net” inc PIKS = 4 years of free tickets

£360m “gross” excluding PIKS = 4.5 years of free tickets

£241m “net” excluding PIKS = 3 years of free tickets

And in every case, not only would the club have made that saving, BUT WE WOULD HAVE NO DEBT.

Anders, I asked some questions yesterday but have not heard back from you. Maybe you missed them, so I shall re-ask?

"Andy if you were to table an offer for MU, what would you base your valuation on (absolute or relative valuation)? If relative, would you place a premium on the terminal value or the residual value? Finally, how far into the future would you look for the valuation purposes?"

Further a few more questions I need to ask you:

- Have you or do you own any business(es)?

- During the financial crisis of 2007-ongoing, have you lost any money for your fund or clients?

- MU just rolled over it's debt right in the midst of the financial crisis. Not the best of scenarios, but a good one none the less. Would you know where most of the demand came from: HNWI, HF or Institutions? Further from which area of the globe was the demand the highest for dollar denominated debt?

- What is the capitalization rate of MU?

- Do you think MU is a growing business or shrinking business, and where in the business life-cycle are they?

Basic questions and hopefully you get to answer these. If so I can then ask follow ups. My reason for asking these is to get an idea of where you are coming from based on experience!

The Panorama programme is not available in Scandinavia yet, please pull some strings at BBC World :-)

However, in the post at 16:33 you put forward the minimum sum I think should be included in all calculations MUST use: SO FAR, being sold and saddled with debt has cost United AT LEAST 240 million pounds sterling. Only 48 million pounds a year. WORST CASE scenario, short term, is a 323 m loss + 79 mill (possibly minus tax savings?) a year.

The smallest numbers are surely big enough, and noone can start questioning the facts.

And of course this is legal, actually, this is a masterclass in taking over a commercial enterprise without any risk whatsover to yourself. But what is legal, and what is morally right or morally acceptale behaviour, are two different things.

On your first question, are you talking about a discounted cash flow model to value United? If so, I don’t believe a DCF (whilst theoretically correct) would be of any value. The oscillations in year to year cash flow are so extreme in football the one year forecast would be unreliable yet alone the terminal value.

As for putting a premium on the terminal value, why would you? In a DCF, the terminal value IS the present value of the cash flows from the end of the forecast period. It doesn’t need adjusting.

When you mention a residual value, do you mean some terminal NBV? NBV is meaningless for football clubs in my view.

If I was to value a football club, I’d use some multiple of its EBITDA less a constant charge for transfers. The multiple would depend on growth prospects and my “plans” etc. It’s not easy to come up with sensible comps!

On your other questions:

1. Yes I’m a partner in my firm so I own a bit of it.2. Thankfully I stopped managing equities in 2006 and moved to fund of funds (which I hated and have since given up). Undoubtedly I’d have lost money running a portfolio (plus it was long only).3. I understand most demand for the bonds came from Asian private banks and US hedge funds.4. Do you mean the appropriate cash yield? Please clarify.5. It’s a growth business in commercial. I believe media and matchday are ex-growth (unless they break collective rights which I don’t believe will happen). The key problem is cost inflation being eating up all the commercial gains. On the playing side we must be at or near our “football cycle” peak and at current ticket prices there is no economic case for a bigger stadium.

If it's 300mil instead of 443, then this is still surely a huge cost. You should nail your colours to the mast and say you believe this is not beneficial to United in any way. Will you confirm that you think this level of costs (300mil) is bad for the club?

Finding fault with the Glazers does not mean you have to jump into bed with MUST or the RKs. They are 3 separate, admittedly related issues but you can oppose the Glazers while not joining MUST.

I will sort of agree on the point of MUST slightly over-emphasising some issues. It is not needed because the reality is worrying enough. But In understand it as there is a propaganda war afoot it seems, and there is no shortage of biased views from Gill or the Glazers, with their "everything is rosy" mantra.

Btw, I have nothing to gain from any association with Andy, MUST or the RKs. Just a life long fan from 3 generations of match going reds who is very concerned about our future.

I would rather the fans stepped up and bought into a share scheme. I'll cough up tomorrow and ask for no returns other than a vote and a guarantee we debt will be minimal and the majority of profits are re-invested in the team and facilities.

I think the ShareLiverpool scheme looks more professional and ambitious than any serious plans we have. While it may be idealistic, we (and they) won't know until we really try something like this.

Well for absolute valuation you could use DCF or RI. So depending on your choice, you'd either be selecting most of the value at the end or beginning of the valuation period. You could put the premium on terminal value by either forecasting a higher growth than average, or lower required return. I would presume being family owned a lower required return would be the case. Growth staggers of to LT average. In residual valuation, most of the value lies at the beginning. Did they take the FMV of net assets and project from there? I'd like to know how the valuation of MU was arrived at prior to the takeover.

As regards to the 3rd of 5th (3/5) question, you know the situation regarding the shadow banking economy and how liquidity had evaporated about 2008-2009. So to be able to refi in the midst of a financial crisis (with relatively strong demand) should empahsize the value of the brand. I think most people who purchased the debt did so with brand being the primary driver and not the football arm. These HF's, PE's and PB's are flush with cash With the increase in the number of HNWI. Institutional demand is no longer considered an important gauge. So personally, I can see positives in the the last refi as regards to clientele and method. There certainly is plenty more of this demand.

Regarding 2/5, I personally manage HNWI's and I'll tell you, the last financial crisis was seen coming from miles out. I would think the Glazers advisors saw this as well, and hence most of the refi on 1st Allied prior to the crisis. So they had all that bank debt on MU (which is really short term and more senior to almost everything), and now they have converted it to more of a longer term issue. This would enable them to smoothen earnings and remove the volatility in the short term. Debt can be beneficial in terms of tax savings as well, and it looks like they are exploiting this route completely. Nothing illegal. Currency is one of the most difficult things to project (Even Warren Buffet got burnt). Using those swaps to the full would be seen as good business management. What if the dollar sank drastically, as was being projected all throughout 2005-2010 (esp as soon as the trade deficits started widening exponentially and the US bailouts started), would the current lose in swaps not be dwarfed with the potential loss the other way (through incomplete hedging)?

Regarding the potential growth of the commercial arm, I have to say that this is still in its infancy. The Yanks and Cowboys do a spectacular job at commercial marketing. We'll surpass them based singularly on the brand MU, but when it will happen is another case. The football arm is dead weight, and is probably now seen more of a marketing tool. A loss in match day revenue, though not the best for the team, can be withstood by the commercial arm. Remember also, many of these players are taking in a sizeable chunk of change from the sales of their shirts as well as personal endorsements. However, with our ridiculous wage bill, and loss of this additional revenue (as more and more players taking a greater % of their shirt sales), we have to weigh the profit with the loss. If any players MC > MR then even I would have to let him go, no matter how talented and immortal.

By capitalization I mean the the difference between the required return and growth rates of MU (r-g).

So all in all, we are not in the best case scenario with the large debt load, but I know the options are there and demand as well if the different forms of refi are pursued. What is more important from my point of view is not if debt is going to keep going up, but the percentage growth in debt/(ebit or ebitda), interest coverage and a few other ratios. If overall company can grow at a faster pace than debt, we should be fine. If not, we are in trouble.

@ SwefYou are obviouly coming at football from a completely business point of view. How on earth do you calculate the Marginal Cost vs Marginal Revenue of a footballer?How do you decide on a homegrown player e.g. do we keep a Luke Chadwick or do we keep a John O'Shea?Do we get rid of Scholesy because he no longer sells many jerseys? Who of the current squad should we get rid of under your MC vs MR?

Thanks for the link Anders, I was thinking that it would be good if BBC World sold the programme to Scandinavian TV channels, so more people got to see it :-)

As I understand it, the next vital financial information will be the yearly results, which will be out in late August, probably? At that time, we will know the attendances for the first couple of games as well. Could be interesting.

Yes I am. That's what the Glazers have bought it for, BUSINESS. Business is about success. Nobody buys businesses so that they fail (though there are exceptions to the rule {high taxation related loss making enterprises}).

First I need to clarify, I love MU, but I am trying to view this as a business deal more than a deal out of love. MUST is fighting from a love standpoint (hence excess emotions always trump sense). About 95% of businesses that are bought out of love (Note: bought not created) fail due to a high levels of emotional attachment which obscures the true running of a business.

I view this as a purchase for profit purposes so I want to clarify that AGAIN.

From the current squad I cannot tell you who would leave as I do not have the information necessary to build the scenarios. I am not an insider privy to certain details. When it come to constructing MR vs MC, there are many aspects to take into account though, not just purely financial.

For someone like Ronaldo, he wanted to leave, and if he stayed you were probably assured of paying even higher wages and seceding greater portions of shirt sales. Was his influence on the team such that we could not do without him? This term has proved that we can do without him, and from the fact that 80M was on offer, even I couldn't see why we had to keep him. The CL final of 09 was evidence enough that his time had come to an end. We basically played Barcelona with 10 men. 80M is a heck of a lot of money. Why are AC Milan fans not jumping the gun yet they sold Kaka for 54M, which is still an astronomical fee.

Do I see any problems with the current UTD transfer strategy. There are many many new rules coming into play in the next 5 years. Most fans have no idea of these, and hence the constant "We are not signing anyone worth extra-ordinary sums". Veron? If we had spent 200M last summer and finished second would the fans be happier, than selling Ronaldo (and unrestricting much of the other talent in the squad) and finishing 2nd - a point off?

For the record, I did attend a few of the reserve and academy games, and we have some talent there. Let us go back in time, just prior to the "YOU DON'T WIN ANYTHING WITH KIDS" quote. If we were back in that moment, and didn't spend in the off-season, what would you have been thinking to yourself? Sometimes, being on the outside is easy. Running a business is completely different from being a Monday morning water-fountain quaterback.

A point on the BUCS season ticket waiting list. BUCS do not have a global fan base, the Greater-Tampa Orlando area is their fan base. This area is currently dead in terms of any investment. The areas unemployment rate is beyond the national average. Would it surprise you that their season ticket waiting list has disappeared as a result, esp since most people in the area were only a few paychecks away from disaster? I stayed in the area for 15 years if it matters.

And Anders, from the 80M we have already spent about 40M on new players (Valencia, Obertan, Smalling, Diouf and Hernandez).

Being an eternal pessimist, my imagination wanders to what the Glaziers (sic) could do to raise cash to pay off the PIKs before they mature. Without scaremongering, merely offering an opinion, selling off of the clubs' assets seems a possibility

a) Sell Old Trafford (to First Allied?) & lease it back. More increases in ticket prices & refreshments, a McDonalds/Costa/Theme park under the Stretty?

b) Sell the land around the ground to developers - car parking becomes more expensive (not that this is such a bad thing in some ways). Casinos, luxury flats, hotels.

c) Sell Carrington & lease it back

d) etc etc.

Oh, and the people claiming that saving on corporation tax is a good thing, well selfishly yes it is, however morally it is very wrong. United are a British institution, based here & should therefore pay tax accordingly on any profits as we did pre-Glazers. Not only are we the United family suffering, but the rest of the country as tax payers have lost out too.

@ Swef - you little dark horse, you! :) I thought you came here seeking answers to some high-fallutin' financial questions but it turns out that you had an agenda.

I actually think you make some valid points but don't expect much sympathy. Some people are happy to point out the business side of things to the nth level but steadfastly refuse to accept that Manchester United is a business at the same time.

The best you can hope for is that your discussion is taken seriously and respectfully for a while and then the nasty insults will reign in from the MUST zealots.

You comment about the 12th man were spot on.

When people spend more time objecting to the owners than they do actually paying attention to what is happening on the field, the players could almost be forgiven for thinking, "why bother?"

@ Anonymous (the last one) - Don't give the Glazers ideas! :)

"Oh, and the people claiming that saving on corporation tax is a good thing, well selfishly yes it is, however morally it is very wrong"

No it isn't morally wrong. Extracting by force values created by the efforts of others is morally wrong.

Running a business that provides employment for many people which then provides them with self-esteem that comes with being financially self-sufficient and funds to go out and spend in order to keep other businesses running and in turn many other people employed is morally very, very right.

if you stopped viewing business people so negatively, you might actually start to wonder where the hell we would all be without them.

For a start, that computer you're currently using wouldn't even exist.

@ Swef @ The Red DevilYour comments re: 12th man are laughable in the extreme.YOU have as much responsibility as members of the crowd as everyone else.However, no doubt you were analysing the business implications of each missed Carrick pass and each Scholes mis-timed tackle.

Please never feel sad for me. I am pretty certain I noticed Fletch's talent before most. All you have to do is go to reserve and academy games, you know the ones where only a handful of people show up. My question to you, forget the first team. Between the Glazers, RK and MUST, who do you think has the highest to lowest responsibility of cheering on our youth?

I DO NOT have the responsibility of being a member of the crowd. My responsibility is as a fan of MU. I do not want to see MU languish for 15 odd years as result of the war currently going on. I would like to see this club remain successful.

As regards to your comments on Carrick and Scholes, you are putting words where there are non. The business implication extends beyond the turf to areas where profits can be developed for the long run. Anders has already pointed out that the footballing arm is deadwood. Season ticket related revenue is not keeping up with the wage bill. I doubt if the gap in this respect will ever shrink. You know the UK tax laws, the absurb laws of over taxation of salaries. We have to pay Ronaldo about 340K to match his 200K salary at Real.

Ole once you manage a business of any sort come talk to me. Coz so far all I hear is a bunch of two three liners with no level headed thought or solutions coming from your end. You want to see the Glazers out, keep banging your head at the wall and one day you will hopefully get to shout victory.

I didn't think MUST or RK was going to buy MU so as to run it as a NFP.

@ SwefI am not putting words anywhere. You already confirmed at 21:38 yesterday (“Yes I am”) that you look at football completely as a business.

You know nothing about my business experience.

However, I would say that the ideas you express are very theoretical in a footballing sense (e.g. MC vs MR). Do you really thinks this happens when SAF decides on a player? Or does he look at the football (i.e. non-business/financial) aspects?

This lack of practicality suggests you may be a student on an assignment and certainly not a real world business person.

You say I don’t present solutions. This is not a solutions forum. This is a discussion forum about the finances of United and its owners. You seem to be quite happy with our financial situation. Can you please explain why.

"Results at OT were actually better after the launch of the green and gold campaign, compared to the first half of the season. So that point of yours is nonsense."

It is surely no coincidence that the most ludicrous comments are posted by Anonymous on here?

Are you genuinely trying to say that the green & gold campaign had a positive impact on the playing staff?

Not perhaps the fact that our defense was non-existent for much of the start of the campaign. We had lost two key players in the Summer and were trying to find rhythm under a new system? That Nani came on leaps and bounds in the second half of the season perhaps? Also, United have had a tradition for finishing a seasonstronger than they start for years.

Reversing your argument, I could just as easily point to the fact that we had won the previous three Premier Leagues and had reached two Champions League finals but as soon as those g&g scarves came out it all went a bit belly-up.

@ Anonymous2 - After he left, Ben Foster said "There’s maybe too much made of it by the supporters. They are obviously passionate about Manchester United, but sometimes they need to focus on supporting the club a bit more than getting carried away with the technicalities of who’s in charge. However, it’s a bit of a distraction when the fans are chanting at every game."

Now, I know the anti-Glazer fringe don't want to hear that kind of thing and immediately discredited Foster's comments with remarks such as "Who the hell does he think he is? He's not even at the Club any more. Idiot. Should concentrate on Birmingham now." etc etc etc

But, you have to remember that Fergie is being placed in a very delicate situation. He has to choose his words carefully or leave himself open to accusations of taking sides.

He has to be diplomatic.

Fergie also cannot actually speak for the players because he cannot really know what exactly is going on in their minds.

Ben Foster, as a player who has left, is probably in the best position to comment. He experienced it first hand and is telling it how he saw it. What motive could he have for saying it if it wasn't his personal opinion?

I can only speculate as to whether or not Foster is speaking on behalf of the other players who remain at Old Trafford but I don't see how, on balance, shouting about something that has got nothing to do with the game at hand can have a positive impact on the players.

@ The Red DevilEvra seems to understand the supporters: "They are the original colors of Manchester United and the fans wear them because they love this club,” United captain Patrice Evra said in an interview. “They have their reasons for doing it and we don’t think that they’re crazy. They’d like things to change"

So to confirm - it is NOT a bad thing that £2-300mil has left the club to service debt/etc.?

How can you say that? I accept your view but it seems crazy to a layman. How can giving huge amounts of money to banks be a good thing?It has not benefited the team in anyway at all, so I find it hard to see why it could be good.

I would MUCH rather we spent a bit more on players, maybe extended the stadium or maybe offered some low cost tickets for kids - you know actually invest in the business for the future. What benefit have we received for giving that money to the banks? There is none surely, unless you work for one of the banks. If not, can I have some of your money and I'll give you nothing in return?

I accept Foster's comments, but think they are balanced by Evras. I think they are both honest - why would Evra potentially risk his job if he didn't believe his words? And I'd rather take the view of a key player than an ex-player really.

Lets be honest though come on - the protests were typically kept to a minimum during games until we were on top. In games where the result was in the balance the protesters kept schtum and got right behind the team - even until the last minute in some games like Bayern.

I think fans have every right to protest if they are not happy. And they have every right to exercise consumer choice and withdraw their custom if they don't like the way things are run or they don't think they are getting "value". Lets see what the masses think after another "difficult market" transfer window. We make huge profits, but spend a fraction on the team and the rest on debt. Seems like the fans are being ripped off to me, and a lot of Bucs fan are saying the same.

/Patrick

PS - Can't be arsed creating another account or signing in all the time. I don't use all cookies because of the security threat

The Red Devil, your snide comment"No but I do sometimes sit and wonder where the money for all those green & gold scarves is going."can be answered as follows:Money from scarves bought from or via MUST goes towards the MUST campaign. Scarves bought elsewhere - street vendors etc - you would have to ask the street vendors. As the choice of point of sale is up to the purchaser, why they bought a scarf from where is their decision. On the cosmic scale, street vendors are nothing like as parasitical as the Glazers.

You KEEP hounding on 300M taken out. And what has been brought in, in terms of the commercial arm (200M), is that a non-figure?

@ Ole,

Please, you have business experience. But your arguments are childish. You respond to a 10th of what I ask you. And you refer to me as a student, if only you showed some finance or accounting experience, maybe you could help me manage 65M.

@patrick - you demand that I answer yes or no and when I do as you ask, you want my explanation because I did not give the answer you wanted! :)

However, it is clear from your reply that you do actually want to debate reasonably so, I'll do my best in return.

Firstly, "It seems crazy to a layman". Yes, it does. The figures are beyond the comprehension of us "ordinary folk".

I cannot even begin to imagine what £300m would even look like stacked in, say, £10 notes.

It's mind-boggling.

However, it is all relative and it important to keep the figures in context.

When you take it out of context and say "How can £200 million going to the banks and not on the team be good?" it is impossible to answer that is IS good (unless, you're the bank, obviously).

However, think of it in terms of the mortgage on your house.

I don't know how much you pay for your mortgage but if you manage your finances well, your mortgage is neither good nor bad. Of course, it is money going to banks when I am sure you would rather spend that money on a new car or a holiday or whatever but you accept it because in return, you are getting a roof over your head and at the end of the term, the house will be yours and you will have an capital asset.

However. If your mortgage rate shot through the roof or you lost your job and found yourself in a situation where your mortgage was more than your income then you're in trouble.

In that situation, you have two options:- sell your house or increase your income.

Assuming that neither of these things happened during the term of your mortgage, you should be fine though and you will be able to pay it off ever more comfortably as time goes on (remember, due to inflation, what might be a high monthly repayment at the start of the mortgage is not nearly so high in real terms by the time you get into 10,15,20,25 years of paying it).

In order to repay their "mortgage", the Glazers have structured it in such a way that it now has a fixed interest and so they know exactly how much needs to be generated in order to service it. They appear to be doing this comfortably and this will get even more comfortable as time goes by.

Whether they have cost us £5 Million or £500 Million is irrelevant now, I think. Whatever it has cost has now gone and can never be reclaimed even if a new owner were to come in tomorrow.

Despite what MUST, Anders and a dodgy documentary on BBC would like us to believe, I don't think that the Glazers are a bunch of ridiculous garden gnomes. I think that they know exactly what they are doing and just need to be given time and a fair crack of the whip in order to do it.

Had you not seen the financial reports, could you have had any complaints about the team's performances over the five years since their arrival? Would you have even believed, that £200-300m has actually been "wasted"?

We're still competitive, we still have a great youth system and we still sign players when Fergie believes they will add something to what we already have.

Anders makes the point of "have the Glazers been worth the cost?".

I think the jury is still out on that one but, so far, so good is all I can say.

What has happened happened five years ago. Sometimes you just have to move on and let it go.

The Glazers want to make money from Manchester United and that means making it the biggest, the best and the most successful. If they sell all the stars, if we fail to play Champions League football every season and if we fail to win silverware regularly then their plans are dealt a severe blow. It is in their best interests to do everything within their power to ensure that we remain exactly where we are as a basic and aim even higher.

MUST will try to convince you that there is no investment for the future and before long the whole house of cards will crumble to the floor.

They have been saying this for the last five years and continue to say it.

I don't know why they are worried. If they are so confident of their predictions then the opportunity to buy the club will come around sooner or later, won't it?

By encouraging people to boycott the club and "hitting the Glazers in the pocket" they are trying to engineer a situation where their own predictions come true.

I just wish that MUST members would turn their critical eye on MUST themselves and ask, "Are they REALLY doing this for the benefit of Manchester United or am I being used as a pawn in a political battle for control and power?"

It is easy to scream and shout obscenties at people. It is easy to join the "in crowd". It is easy to go with the flow.

It is much, much harder to actually THINK a situation through properly and I just don't think that ALL MUST members have done the thinking. They have taken the word of others as gospel without fully understanding the details.

Just my humble opinion. Feel free to disagree but I don't really know if I have any more to add to that. (You'll be pleased to know ;) )

Beats me why people are still rising to the bait of The Red Devils postings. In my opinion he's either a WUM who doesn't know when to stop or more likely he's being paid to come on here to distract and confuse (just check how many links to betting and other commercial websites there are from his website, must be making a tidy sum with click-through fees?). Either way he's certainly getting the attention he so obviously craves (and no, I won't be responding to your comments mate should you choose to make some more).

Regarding the Glazer ownership of our great football club: can we just remember that it was a hostile takeover that saw the club change hands and that the original bid was not welcomed by the PLC board. It's no wonder that there's still so much hostility towards the gimps which has only been magnified by the huge pile of debt loaded onto the club, not to mention the year-on-year ticket price hikes.

On another note, the TO at OT seem to be wasting even more of the clubs money. We have two season tickets in my house and since the gimps hostile takeover, I've always left it to the last minute to renew. So I was surprised to receive a letter from the TO this morning reminding me not to forget to renew. This has never happened before so I suspect the renewals are considerably down on previous years.

Do you think the best eleven we can put out now is equal to or better than the CL winning side from a couple of years ago? I'm all for bringing in young players, but in the past we've blended them in with star signings. Now we're replacing our star names with decent enough players, but not the sort who'll win us trophies. Do you think Valencia is a match for Ronaldo, or Smalling will be an adequate replacement for Vidic? Under the Glazers our net transfer spending is around £20M for the last 5 years, while we're still haven't signed proper replacements for Giggs and Scholes who can't go on much longer.

RobC - "Beats me why people are still rising to the bait of The Red Devils postings. In my opinion he's either a WUM who doesn't know when to stop or more likely he's being paid to come on here to distract and confuse."

Paid!? I wish! :)

No. No one pays me to come on here and get publically slaughtered.

So why do I do it? I have been seriously asking myself the same question for weeks now.

I have no hidden agenda. I am not on anyone's "side" in particular (although I am clearly not on the side of MUST).

I think I am just tiring of the campaign that MUST are waging because I think that it is causing more harm than good.

If they want to buy the club, buy the bloody club. If they can't afford it, let the Glazers get on with it and campaign for things on a smaller scale (season ticket prices, kids in for free or whatever) but don't wage a campaign that attempts to undermine and make fools of those who are genuinely trying to get on with the job of running the club to the best of their abilities.

By that, I mean Gill and Fergie (yes, I have seen some people demanding that Fergie should resign).

It also seems like every little thing that goes against us is the Glazers fault. We fail to sign a player - the Glazers fault. We fail to win four successive Premier League titles - the Glazers fault. We sell Ronaldo - the Glazers fault. It rains in Manchester - the Glazers fault.

I just wanted to redress the balance in my own little way and if I give one or two people pause for thought along the way, great.

I know that having these discussions has improved my own knowledge of the situation but it hasn't changed my overall view.

And even if it had, the Glazers would still be in charge and I would still be a Manchester United supporter.

Those same stats also say that 4 out of 5 of our highest transfers were in the last 5 years of the PLC.

If you look at the trend of net spend (transferleague.co.uk is accurate) it shows a huge dip in overall net spend in the last 2 years in comparison to the 3 before (under Glazer) and the 5 before under the PLC.

Adjust for inflation in the market for players (constantly high for top players) and also our increased profits (well done Glazers, yes) then we now spending much less than we did as a PLC.

This is distorted by one huge sale of course, and our buys could change. Lets see if we buy anyone else this summer. I'm not holding my breath, but I do hope we improve the squad with real quality.

I would like to see some purchases as well. Would give us some player diversity from those who have just academy and reserve squad experience.

I don't want to get into slicing and dicing as then we can boil it down to just spot number 1. Would rather see it as a stat of 10-20 players.

I say Rooney is pending, as he is still young. Anything can happen going forward. I would like to pass judgement on him when he is closer to 30 (when hopefully we'll all be saying absolutely class). That is the only reason I say pending as he is not 30 yet. You should have seen it as such.

A reconciliation for the 200M as per your analysis.AIG - 56M shirt, plus 5M a year 5-year MU Finance dealAON - 80M shirtNike - 32MSo that leaves about 7m short of 200M. Surely the 20 additional partners cover that 7m and a bit more?

The 200M is a not a non-figure, and honestly, we have had better shirt sponsorship deals being private rather than a PLC. If you recall, Vodafone had to terminate mid-contract due to the giant AIG offer in 2006. AON money upfront invested even at a minimal RFR is better than incremental payments. So I certainly think that we wouldn't have had half decent shirt deals in the alternative scenario.

So back to my original question. Is the team now better or worse than the team from 2 years ago? Ronaldo gone, Tevez gone and replaced by Valencia and Owen. Giggs and Scholes pushing the Dorian Grey envelope with no sign of replacements. To me, and to most fans, it looks like we're on a downward trajectory.

I don't think it is downwards at all. We need maybe 2-3 signings in various positions (gk, creative mid). But downwards come on, the reserves just won the national league. Academy won their league. So all in all, we do need a few reinforcements, but the youth coming through are going to surprise many people.

Where I do think there is concern is the medical department. Why did we have so many injuries right from the pre-season off? In that scenario, even if we had the best 11 in the world in every position, injuries would negate all that.

One other point, that sports science is really growing leaps and bounds. That has the capacity to really turn mediocre players into stars. Simply because of a deeper understanding of each individuals physical composition and the ability to tweak as necessary. And for those numbskulls who laugh at this, go check out the sports science lab at Loughborough Uni. You'll be blown away with the technologies at play.

Ronaldo was arguably the best player in the world... how do you go on an "upwards trajectory" from there?

If you are insinuating that Ronaldo left because of the Glazers, get real.

Tevez - let's see what he does next season. He was lured away to City by riches. No Manchester United owner past or present would have given him what he wanted.

Three Premier Leagues in four years and a second place last season does suggest a "downward trajectory" but give me a break... how could it have possibly gone higher? Four in a row? Never been done by any team under any ownership ever.

Two Champions League Finals and a disappointing Quart Final exit last season. Can you honestly say, hand on heart, that we were the weaker side during that tie?

Again, this might suggest a downward trajectory but I would ask you to show me a point in our history where we have done as well in the Champions League for the bigger picture.

No obvious signs of replacements. Well, they haven't actually left yet so don't need replacing as such but do the names Hernandez, Smalling, Diouf and Obertan ring any bells?

There's plenty of time for new arrivals if Fergie decides we need them. The transfer market hasn't exactly been a hive of activity at ANY top club so far during the close-season.

By the way, are you aware of the squad restriction rules in place next season? We are over-subscribed in the playing department already.

There has never been a better time to be a Manchester United fan but you have been told it is all doom and gloom and you have allowed it to cloud your judgement.

"Manchester United’s on field success depends on its ability to attract top talent to the first team. Competition for talent remains intense across top European Clubs. MUFC has relative financial scale advantages over most other clubs in Europe. The club generated the third highest revenues in football and in FY09 according to Deloitte (Annual Review of Football Finance, 2009) allowing it to compete financially for the top football talent (they are behind Real Madrid and Barcelona owing to a relatively strong euro and the individually negotiated media deals at Spanish clubs). The club also has a very strong youth development programme which gives the potential to add strong players to the first team without paying large transfer fees. In addition to pure financial considerations we believe top players and coaches will be attracted to MUFC’s track record of success in the highest profile club competitions including the FAPL, domestic cups and the Champions League. We also note the value of association with the global MUFC brand increases the individual sponsorship potential of top players."

"Ronaldo was arguably the best player in the world... how do you go on an "upwards trajectory" from there?"

Agreed, but we could've tried to maintain the standard, and I can't see how replacing Ronaldo and Tevez with Valencia and Owen achieves that.

"If you are insinuating that Ronaldo left because of the Glazers, get real."

I wasn't. No need to be so defensive. Players come and go, but it's the duty of the club to maintain the standard that's been established.

"how could it have possibly gone higher? Four in a row? Never been done by any team under any ownership ever."

And? So it's never been done, yet in a season when neither Chelsea lost 6 matches and still won the title we had a golden opportunity to do just that, but because we were so reliant on Rooney and didn't have proper attacking options we let it slip.

"No obvious signs of replacements. Well, they haven't actually left yet so don't need replacing as such but do the names Hernandez, Smalling, Diouf and Obertan ring any bells?"

Have you seen them play? None of them are yet at the level we need, although given a few years one or two of them might be good players. Some of them will never reach our standard. Were does that leave us for next season?

"By the way, are you aware of the squad restriction rules in place next season? We are over-subscribed in the playing department already."

Yes, so why replace one great player with 3-4 average to good players?

"There has never been a better time to be a Manchester United fan but you have been told it is all doom and gloom and you have allowed it to cloud your judgement."

I think I've been around long enough to make up my own mind, and I've seen nothing in the last few years to allow me to share your optimism.

I know what our reserves are like, I would go and watch them on occasion, so I know what we've got coming throught the pipeline. There's a huge gap between reserve team football and premiership level, and few of the current crop will make the step up. The likes of Norwood, Cofie and Pogba could be great players, but not next season, and probably not the season after that. Where does that leave us when Chelsea are only getting stronger and City are looking a real threat? By the time they come through will we still be a top 4 team?

We need serious investment now, a striker, an attacking midfielder, a left wing and a goalkeeper. also a central defender could be a good buy if Rio's injuries don't improve and Vidic's wife drags him off to Madrid. Given the current financial situation at the club I can only see us adopting a make do and mend attitude, patching things together for another season.

And the day I start taking football advice from JP Morgan is the day I'll give up and start watching tiddlywinks instead :)

Man CT- signed 1 released 3. We've signed as many as them and sold 1. So I guess they are stronger as well.

So other teams in the premiership do not face players whose families are discontent. It only happens at United? I suppose I can agree with you, we don't have perfection at Utd. Any chance you have perfection where you work? Are you never discontent with your employer? Is life perfect? Did it rain beer instead of water?

I remember, 2003-2006, we were only going down then as well. Even in 2007 we were only going down. In 2008 the only way was down. 2009 ohh nooo down again. 2010 the trajectory is down. 2011 way->down, 2012->down, 2013 Sheikh Mansoor buys Utd, invests 200 Billion, we have 25 new players, win everything, the only way DOWN.

And I agree, as a retail investor you should not take advice from JPM or any other IB.

You are comparing Valencia and Ronaldo. So in comparison, have we replaced the following?-Best-Charlton-Cantona-Keane-Robson-Edwards-Law-Irwin-McClair-Hughes-Dunne-Rowley-McIlroy-Mitten-Meredith-Busby-Schmeichel-Solskjaer

We never replaced Best, Charlton and Law and ended up in the second division. You may remember 2003-2006, but I'm old enough to remember the seventies and what happens when you don't keep building on success.

We never replaced Beckham but we got Ronaldo instead. Rooney isn't a direct replacement for RvN, but the team didn't suffer when he came in. Keane for Robson, Evra for Irwin. You don't have to go out looking for the same sort of player, but if you can sign some-one of equal quality then the team keeps progressing. I'm happy with Valencia on the wing, but we should've used the opportunity to sign an attacking midfielder as well, something we've been lacking for a few years now. It's about the quality of the team as a whole. At the moment we're almost entirely dependent on Rooney and if he's injured there's no plan B.

Chelsea under Ancelloti finished the season strongly, and as it looks like they're signing Torres then they'll be even stronger next season. We'd need three major signings to be able to compete and it doesn't look like the money is available.

3) Between 1990-1994, Robson played a part in 73 league games. This is about 45% of all league games MU played in the time. Further, Robson started only 60% of those. So all in all, we can estimate he started approx 46 league games from a potential 164. Keane was bought in 1993, Robson's last season. So quite a gap between Robson's peak and Keane's purchase.

IF and WHEN ChelC sign Torres.

If based on speculation we are weaker, then so be it, no point wasting time debating in this case.

-The SUN wrote we are to lose Vidic to Man CT. So based on speculation we are already weaker.-Based on speculation, aliens will invade earth.-Based on speculation, Sheikh Mansour will join forces with Abromovich and purchase players for the rest of the premier league teams except MU. This will ensure the complete and total demise and ultimate relegation of MU.-Based on speculation, we are so broke Ferguson will have to come out of retirement.-Based on reality silly season is in full swing.

1) if you remember the seventies you'll remember what happens when you let a good team age without rebuilding. Having gone through it once you wouldn't want to go through it again.

2) okay, stick Heinze in between Irwin and Evra, but the two year gap corresponds to a drop off in performance. Get the replacements in on time or the team suffers.

3)And If we'd signed a replacement for Robson earlier we might have won the old first division in 1992.

Each case just strengthens the argument. If you let a player get past his best the team as a whole suffers. Once they are properly replaced the team's performance improves. So why are we repeating the same mistakes with Giggs and Scholes?

The Torres to Chelsea/Vidic to Madrid stories are more than mere speculation, and I'd rate the Sun not much higher than JP Morgan for football information. We're at a crucial period with a squad more and more dependent on ageing or injury prone players, that much isn't open to debate, and the opposition will strengthen, whether you choose to believe the stories or not.

You're right, this isn't a Portsmouth blog. If it was we might be prepared to accept less than the best. But as you so rightly point out this is a Man Utd blog, and our standards are so much higher. We can't settle for "not bad" or "fairly good", we have to go into a season with a squad that can win the prem and the champions league.

The last 5 years have been very successful, perhaps comparable with the 1996-2001 period. But do we rest on our laurels, sit back and live on past glories? Isn't that the mistake we've made before? We need to keep pushing, keep building, replacing older players and bringing in new talent.

Our team needs fresh blood. Some of that may come from the young players we've already got, but there needs to be proven talent on the field to give the youngsters time to develop. Even the Scholes and Backham generation needed the likes of Cantona, Keane, Bruce, Pallister and Schmeichel. Would you be happy if we were to start next season with the current squad, or do you think we need to invest in established talent?

@ Bootsie - I do actually agree and have been saying as much for a little while now - Such as here

We definitely need one or two more players and I think that they do need to be of the more established type but I wouldn't panic just yet. The season doesn't kick off for a good couple of months yet and even then the transfer window doesn't close until the end of August.

None of our rivals have exactly been busy with transfer activity so far yet either.

To start Thank God the bond debt is not putable. Bond debt provides more stability and enables more longer term financial planning compared to the bank debt it replaced. Bank debt is senior to all other forms of capitalization, costliest, shortest in maturity and variable based on the mercy of the bank. So converting the bank debt to bond debt IS a good move, and I hope people with half an acumen would acknowledge as such. With the bond debt, we know before hand the interest rate (fixed throughout the life of the bond) and maturity. Companies actually issue even longer term debt (30 year bonds) to fund asset purchases or new projects. I haven't read the bond prospectus (would like to - time permitting) so I cannot make a comment on the covenants. However, from the general attitudes of many of the investors and demand when issued, there don't seem to be too many negative covenants. I would like to reserve my opinion until such time that I have more info. The reason I suspect RK pulled the plug is because the bond debt would have become putable. However, there are possible other reasons for their gimmy. It would be the stuff of dreams, if the debt had become putable (a mere year into it). However, I doubt most money managers want to harm their portfolios with contraction and reinvesting risks.

Regarding the PIK debt, this could go either way. Downhill is not something I would like to see. So hopefully with a combination of sound management, growth and success, this scenario will not project out. There are various options in funding and replacing this, so perhaps one or two will be pursued. Right now, it seems like rolling over the debt is either required by the owners of the debt (contractual requirements) or by MU (unsound financial position). I see alot of speculation from people regarding the PIK, but unless they are privy to the contractual details, all they can do is speculate and create fear. Based on our operating figures, I think at some point we will roll this debt over either into more stable longer term debt, or convert it to equity (private or public). The third option of paying it off is possible provided the commercial and marketing arms supercede growth and profitability rates into the near future.

I have already explained the positives of a complete hedge. I don't see an issue with page 29.

Bank debt -> variable. Bond debt -> fixed. Upfront fee to eliminate uncertainty is good business practise. If bank debt rates rose dramatically, the 15M related to issue would be a drop in the ocean. 1% rise would cost approx 5M, and with int rates at all time lows, a 3-5% rise cannot be discounted. In face of hyperinflation (probability mounting), >5% int rate rise cannot be discounted.Hedging is sound risk management, against the unknown. Hedge half, position goes against MU, MU completely screwed, and then Ole would be all full of glee.

@Matt - Manchester United's debt is the £500million covered by the bond (that is how it is being managed).

At the end of that five years, I would say that they will do it all over again.

And again... and again...

All they have to do is ensure that the revenue generated by the club can cover the interest on the bond. This is being achieved comfortably.

In time, due to inflation, £500 million becomes "less" (there's probably a fancy financial word for it but I don't know it).

I.e. £500million will buy you more now than it will in future.

As time goes by, it actually becomes even easier to service the debt because of this.

As for the legality of all this it isn't even close to being illegal.

Manchester United had a "For Sale" sign on it as soon as it became a PLC (that's the whole point of floating a company!). You buy a share, you own a part of the company. You buy all the shares, you own all of the company.

Whether you bought the shares with money you had in your pocket or with money you borrowed from the bank is irrelevant.

The Glazers borrowed the money, they bought all the shares.

If you had been a garden gnome, you would have been able to do the same. Garden gnomes have a very good credit rating.

The amateur in you missed page ix. Dollar appreciation of 13% from 05-10. Now the complete hedge looks like a very good move when applied to 500M. Potential loss 66M if the debt had been left unhedged. Holy shit, risk management enabled restriction of a potentially astronomical loss.

You really are regurgitating others opinions, and are a tad too amateurish in your arguments. Please provide other bond arguments, lets see how good your understanding really is.

I've been trying to have a weekend off, but couldn't help noticing your last comment. What currency hedge our you talking about? The bank debt was all sterling and the hedge was an interest rate swap....

The hedges were entered into before interest rates fell ... they were done to move the variable rate on the bank loans to a fixed rate ... we have now exited these hedges due to the removal of the bank loans.

Exiting the hedge cost more than the £35m mentioned in the prospectus (see Q3 results) so I don't know why you mention £15m.

There is no interest rate hedge on the bond ... the interest is at a fixed rate ... thus your talk of "int rates at all time lows, a 3-5% rise cannot be discounted" is irrelevant.

The £35m is a real cost from past events so what happens to future interest rates doesn't matter.

Keep up your professionalism and intelligence ... it's working well for you so far.

Thus, while you think hedging is good business, United aren't currently doing this.

This is evidenced by the $19m unrealised FX in the Q3 results. As things stand, and considering the potential for future FX fluctuations, this loss will not crystalise until 2017 on the termination of the bonds

From the 5 units under MU Ltd, which would you buy? Your sustainability options? And the debt, and managability of it using these 5 units. 2 of the 5 units are really very infant and showing promise. Where I agree with you guys on, is the culture taking hold of a corporation. That will really relegate the footballing aspect. A private spinoff?

On a separate note, is FIFA cracking down on shirt tugging or holding? Emphasis on more free flowing football???

@ SwefClassic deflection technique ... you are shown up for your lack of financial knowledge of the position United find themselves in ... your solution ... change the subject to hypothetical scenarios.

Still waiting for you to show "some finance or accounting experience".

I laugh at your earlier "maybe you could help me manage 65M." comment. Sounds like you need a lot of help.

OK so then 2 problems - bond debt and PIKs. The key point of difference is that you think the PIKs won't end up being our problem, Andy thinks they will, as the bond prospectus specifically allows them to do so.

Ignoring the PIKs for now - in your example, United (we!) cover the interest on the bonds for the long term and wait for them to depreciate over time.

Correct me if I'm wrong, but I read the bond interest is 8.75%?

So lets say 3% inflation and work out the cost of covering the interest each year in today's money..yr1 500m 43.8myr2 485m 42.4myr3 470m 41.1myr4 455m 39.9myr5 442m 38.7myr6 430m 37.5myr7 417m 36.5m

We then need to add - what - 10m per year to cover 'administrative' or 'services provided' costs - to arrive at a 50m ish figure being siphoned off each of the next 7 years for the pleasure of their ownership. I'm still not feeling reassured for some reason.

The bonds then mature in 2017. I would contend that there is no chance at all of us generating 400m cash to cover them given the 350m or so already leaving in interest payments over the 7 years. So more borrowing or another bond issue would then be needed. I wonder how many people would go for that if we're not in europe in 2015, 2016 ? Fergie will be 75 by then.

The PIK debt stands at 200m+. It would cost 30m+ annually to service the interest in the same way as above. The Glazers don't appear to have their own funds to do that, but the bond prospectus allows them to take cash out of the club for this purpose.If they don't pay down any interest, the PIK debt will grow _bigger_ than the serviced bond debt above by 2017. To 600m or so. It would be virtualy unservicable at that point.Conclude from that what you will.

I'd say their only sensible course of action is to use as much of United's current cash reserves as possible to pay down the PIKs a.s.a.p. and avert complete disaster. Can't see the fans liking that much, considering much of it was their hard earned cash in the first place.

@Anders. How much cash does the bond prospectus allow them to take out to repay PIKs ?

@Matt - I said five years in my original post but as you rightly point out, the bond lasts seven years.

I'm sorry if this is going to be brief. You have clearly put a lot of thought and work into your post and I am going to be lazy.

I seem to have spent hours debating this on several forums today and I am tired.

I do believe that the £500million debt will be rolled over and refinanced indefinitely.

That is as much as I am willing to predict.

How much will teams in the Champions League be receiving in 2015?

How much will Sky be paying to Premier League clubs in 2015?

How much will the sponsors be paying in 2015?

How much will tickets cost in 2015?

How much will mobile technology have advanced by 2015 (the Glazers are putting a lot of faith in this department and with a worldwide brand such as United, it could be a licence to print money).

I don't know. You don't know. Anders doesn't know.

Suffice it to say that if the Glazers don't maintain a successful team, then they won't be able to maximise their profits from any of these things.

A successful team on the pitch should be a fan's main concern.

Our ambitions and the Glazer's ambitions are the same. We both want success on the pitch. The reasons might be different but the end result is the same.

Everything is speculation but I trust the Glazers as businessmen to do everything within their power to ensure that United remain successful. It is not in their interests to have it otherwise.

If they fail and the PiKs don't get paid off then they lose the club. Simple as that (makes me wonder why the Red Knight don't just buy up the PiKs - but there must be a good reason for that because it seems an obvious move to me).

RD's your comment ...'If they fail and the PiKs don't get paid off then they lose the club'...I'm wondering who owns us then ?

@Anders sorry for being thick but I assume that if Red Football is the security and also the owner of the Glazers' interest in United - then in theory we'd either have to go into admin - or else (more likely) be sold on should the PIKs not be repaid ?

I do agree a sucessful team is the priority though I would add being treated, as fans, with some respect and decency as a nice-to-have..

My main worry is that the debts seriously jepordise both of those. Ticket prices wont rocket alongside commercial revenues etc. if we're finishing mid table - and I'm sure we're all old enough to remember that, and a not-full OT with a capacity of 40K-odd.

I'm agree that things will be OK if we remain very successful for the next decade. That requires continued investment though. It's all looking a bit Ridsdale...

I don't speak for them, but as has been pointed out (by me for one), they could either use the club's cash or sell the Bucs to repay the PIKS so buying the PIKS provides no guarantee if owning the club...

I'd imagine it's even harder to persuade people to put in a lot of money to possibly buy Manchester United sometime before 2017 than it is to put money in for a bid.

@ The Red Devil"I could agree with a lot of the anti-Glazer stuff if we were losing money hand over fist every season "

I suppose it depends on your definition of what losing money entails.

Our UK GAAP loss for 2007 was £25.8m, our loss for 2008 was £26.2m. The profit (including the Ronaldo sale) for 2009 was £25.6m.Our loss YTD at Q3 for 2010 is £66.5m

If your definition is purely EBITDA (which I don't subscribe to, because interest is a real cost and player amortisation is a cost resulting from past player purchases) then yeah ok, we are not losing money.

Ole1999 - If I got into a theoretical discussion about financial matters with you, you would rip me to shreds.

I don't have knowledge of these things.

I am merely a humble businessman.

However, this is the problem I have with all this stuff.

When you can take exactly the same business and seemingly use one model to show that it is running at a profit and another to show that it is running at a loss.

What is anyone supposed to make of that? No wonder no one can actually agree on the state of affairs at Manchester United.

Look at your question though:-

"Our UK GAAP loss for 2007 was £25.8m, our loss for 2008 was £26.2m. The profit (including the Ronaldo sale) for 2009 was £25.6m.Our loss YTD at Q3 for 2010 is £66.5m

If your definition is purely EBITDA (which I don't subscribe to, because interest is a real cost and player amortisation is a cost resulting from past player purchases) then yeah ok, we are not losing money."

Eh? Bullshit baffles brains as they say.

This is MY definition of losing money - when what you bring in is, year on year, less than what goes out.

Sorry if it is not very sophisticated but it has served me well when running my own business.

I know what you mean about talking to accountants. A different language that us mere mortals aren't meant to understand!

But I think Ole1999's point is that the P&L and Cash Flow are looking at the business from two different sides, and you need to use both to see the true picture. It's like the old story about the blind men and the elephant, unless you can see the big picture you don't know what you're looking at.

I'm sure some of the financial people on here could explain it better, but essentially cash flow only deals with money as it comes in or goes out, while the P&L deals with the actual transactions. So if we buy a player for £20M, but pay it off over 4 years, then the cash flow will show an outgoing of only £5M this year, whereas the P&L can show the whole £20M (although there's probably something clever you do with it so it's spread out a bit). Similarly if we sell a player for £20M and it's paid off in instalments the P&L can show a £20M profit while the cash flow can only show £5M. The difference in the transaction and actually receiving the money means the the two sets of accounts don't line up which accounts for what looks like a discrepancy between them

Cash Flow also doesn't take into account non-cash transactions, like the depreciation of assets such as an ageing squad. This means you can have a healthy cash flow, but all of a sudden your assets are gone and the business crashes. While Cash Flow gives a good understanding of how the business is trading at a given point in time, overall the P&L gives the best picture of the state of the company.

Thank you both for sharing your knowledge in an attempt to fill the considerable gaps in my knowledge of accounting. It is appreciated and I think I've learned something.

I actually believe very strongly that the Glazers will do everything they can to keep profits to a minimum one way or another in order to make the best use of any "spare" money rather than see it leave their businesses through tax.

Whilst these various expenses and add fuel to the fire of their opponents, I do sometimes wonder if they are not made quite deliberately.

In simplistic terms, if you had a business in the USA that was showing a loss and a business in the UK that was showing a profit, why not pay the American company for some "consultancy" and the like?

@Anonymous - yes, you're correct, the cash flow should eventually merge into the earnings (P+Ls are constructed to smooth out some of the bumpiness in the underlying numbers).

I'd be fascinated to see any club's treatment of the player asset base, at a player-by-player level, let alone United's. Purchased players would be quite easy up until their first contract renewal, but how would you value a youth prospect. If some of the younger players have a good season and then get their contracts renewed, you could get an accounting profit!

Accounting statements *have* to be massaged, that's their point. If I buy some machinery from £100m that lasts for years, and with it I produce and sell goods valued at £30m each year, the cash flow view is -£100m+£30m = -£70m in the first year, then +£30m for the next three, then I need to buy more machinery again. Nothing fundamentally changes though between Year 1 and Year 2, so we 'depreciate' the machine over the four years, essentially pretending to pay for it in installments, say 25% each year.

So the cash flow view is as above, but a P+L view would show a more consistent -£25m + £30m = +£5m each year.

I think the key really is the PIKs, hence why there's so much heated debate about them.

The starting point is usually EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) - pretty much what it says on the tin: How much did you make (or lose), before you take out those factors - United are healthy here.

After deducting Interest (the Bond costs), Tax (none), Depreciation and Amortisation (e.g. stadium build costs, see my 'machinery' example above, and also player value adjustments), we have the Operating Losses (and occasional profit) Ole1999 shows above ("Our [UK GAAP] loss for 2007 was £25.8m, our loss for 2008 was £26.2m. The profit (including the Ronaldo sale) for 2009 was £25.6m.Our loss YTD at Q3 for 2010 is £66.5m".

Total turnover for 2009 was £279m, to put those number into context, and £59.9m of the 2010 loss is due to the cancellation of the swap arrangement (£40.7m) and some unrealised FX losses (£19.2m) relating to the $ bond - this £19.2m could fall (by unknown amount) if Sterling recovers by 2017 from its current level against the dollar (not unlikely).

So paying out the bond interest turns a healthy position into a (very slightly) unhealthy one.

BUT. The Glazers are permitted (it's their company) to withdraw certain amounts of money from the business each year. The PIKs are secured on the Glazer's own assets, and David Gill has said it's not the concern of the club (and the Glazer's have said they're not concerned by them either).

So you can see why there's a heated debate about how the cost of some £300m will be paid!

As others have commented above, it's also difficult to see how the bonds will be re-paid in 2017, other than by issuing new ones.

Anonymous - in the context of discussions on the Profit / loss figures it means we don't (if we still use the same convention) carry charges for Rooney etc - we've already fully amortised (paid for) him.

Conversely, that means that the asset base of the club would appear lower that it actually was, since it's not fully reflecting the value of the players in the books (e.g. Rooney has no value, which is clearly not true).

You have to choose a method and stick with it though - you can change, but not very often (otherwise auditors get upset for distorting comparisons of years). Plus, how do you really value Rooney, or Park - it's very subjective, and would fluctuate wildly every year. You'd probably just create a big headache each year revaluing everyone, and then the accounts would jump around and be difficult to present a clear picture of the business.

So let me understand this correctly, if say year over year the average value of the squad decreased, then our liabilities go up and SE goes down. If average squad value increases year over year, then our assets and SE both go up?

So basically without any impact to our P&L. Only when we buy and sell our P&L gets impacted. When we sell (all sales recognised at once), and when we buy the sales are spread out due to depreciation impact.

Guess I am even more confused now in regards to the cash flow and p&l. If we are running losses and positive cash flow currently, which will over ride in the longer term, esp if both converge?

Thank you Ole and Diem for your time. You've made more things clearer for me.

All this anger at Glazers is because of the debt they have taken and loaded on MU. I know debt is never desirable, but the bonds work like my mortgage I am thinking. Every month I have to make payment (principal and interest). MU only makes interest till 2017. If someone can explain the PIKS to me, because I just can't get my head around it. Why would lenders issue PIKS, it just sounds so bad and reflects poor lending practise.

The bonds are the Senior Secured debt of United i.e. they are our responsibilty.

The PIKs are secured against the shares in United i.e. if the Glazers can't pay then they lose some or all of their holding in us.

Why would lenders issue PIKs? In this instance, it is a number of hedge funds (i.e. not traditional lenders) that have issued the PIKs.

What's in it for the hedge fund? The main return they make is the interest they can charge due to the riskiness of the borrowers (i.e. the Glazers). The Glazers were considered sufficently risky that they would charge 14.25% interest on the PIKs. This rises to 16.25% from August.

If you could earn 14.25% to 16.25% on a loan, wouldn't you lend it - especially if in the instance where it's not paid, you get to own MUFC.

As I see it the risk isn't the club going bankrupt in the next few years, but rather that the money needed to meet the interest payments will mean insufficient funds available to strengthen the squad. I believe we've already begun to see the effects, with players bought in on the cheap and the failure to replace Giggs and Scholes. Net spend under the Glazers in the last 5 years has been around £20M, less than the £25M they supposedly promised each year. Add in the profits from the Ronaldo sale that we're told are still available and we should be sitting on a warchest of close to £150M. We should be in a position to buy world class players, yet we're scavenging around looking for "value".

The real damage to United will be in the next few years when we could struggle to stay in the top 4. If we lose a place in the Champions League we'll lose a major source of revenue and the whole house of cards will collapse.

"I know debt is never desirable, but the bonds work like my mortgage I am thinking"Precisely - in this case, it's an interest-only mortgage due for repayment in 2017. Chances are that they'll be able to re-issue new bonds at that time (deferring the full repayment).

Ole1999s already clarified the PIKs - perfectly good business for the Hedge Funds (three, from memory) who issued them. Also, not an especially high rate of return, compared to what hedge funds would be seeking to make on investing that cash somewhere.